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Legislative Update/IIAA Insider - March 8, 2019
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EIGHT WEEKS DOWN AND MAYBE ENCOURAGING NEWS...
We've completed 8 weeks of the legislative session and as of yesterday there have been 1388 bills introduced. We have experienced a relative small number of insurance related bills introduced during a regular session. But keep your fingers crossed because there is still time for mischief. At a meeting of the State Chamber of Commerce on Monday, Senate Majority Leader Bart Hester stated that the goal was to finish the session by the end of March or the first week of April. Sounded encouraging until we got notice that the Speaker's Ball was not scheduled until April 4.
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GOVERNMENT TRANSFORMATION
HB 1371
by Rep. Andy Davis and Sen. Bart Hester is a section of a 2000 page omnibus bill that will be introduced next week. It would establish the Department of Commerce as a cabinet-level department and assign powers and duties under the Transformation and Efficiencies Act of 2019. The bill would transfer 26 state departments, names the executive head as Secretary of the Department of Commerce, and authorizes the secretary to delegate functions, powers and duties to other personnel as necessary. This bill includes the Arkansas Insurance Department. Contrary to earlier reports that the individual state agencies would operate in the same manner as currently, the proposal gives broad powers to the Secretary of the Department of Commerce, including the hiring of employees for the affected departments and the possibility of naming him or herself as the Department Director. This language not only affects the new Commerce Department, but the same language is included in all 15 of the proposed Transformation Agencies. We testified against the proposal this week before the Senate State Agency Committee and several of the Senators supported our concerns. HOWEVER, Governor Hutchinson is putting the full court press on the passage of this legislation.
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UNEMPLOYMENT INSURANCE
SB 298
by Sen. Kim Hammer and Rep. Robin Lundstrum received a Do Pass recommendation Tuesday morning from the House Public Health, Welfare and Labor Committee. This bill was developed by the Department of Workforce Services (DWS).
SB 298
adjusts the amount of wages paid by employers that is subject to the unemployment insurance tax, by calculating adjusted amounts according to unemployment statistics and the fund balance of the unemployment insurance trust fund. If it was in effect today, the wage base would drop from $10,000 to $8,000. It is possible, that by the time the law goes into effect, the wage base could be reduced to $7,000, which is the federally enforced minimum.
A bill passed in 2017 reduced the wage base from $12,000 to $10,000. DWS reports that change produced $43 million in annual savings to employers. Sen. Kim Hammer told the Senate the estimated savings to the business community from SB 298 is $55 to $65 million.
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WORKERS' COMPENSATION
HB 1650
by Rep. Jack Ladyman and Sen. Dave Wallace is on the agenda in the House Public Health, Welfare and Labor Committee. This bill is sponsored by the Arkansas Self Insured Association. The bill creates a priority lien when a workers' compensation claim has been created by the fault of a third party. It also addresses dismissal of stale cases.
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CONSTITUTIONAL AMENDMENT REFERRALS
Each Regular Session, the General Assembly may refer up to three proposals to the next General Election Ballot. A fourth is available to address legislative salaries, which is rarely used. The Governor's Highway plan and ballot initiative reform seems to have strong support in both chambers and may be the referral made jointly by the House and Senate.
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TERM LIMITS AND TORT REFORM
Eight joint resolutions were filed that address "term limits" and three joint resolutions that address "tort reform." With the House seeming to favor the highway resolution, the Senate is debating between term limits and tort reform. Term limits may have stronger support at this time.
Term Limits
SJR 15 and
HJR 1020 seek to cap legislators' service at 12 consecutive years, but they could return after a four-year waiting period. If they so choose, sitting members would be allowed to finish their 16 years available under the current term limits laws. These resolutions originally applied to the judiciary, but that has been amended out. This proposal, it also contains language that would limit future term limits changes to the General Assembly.
HJR 1012 by Rep. DeAnn Vaught seeks to cap legislative service after 12 years, consecutive or not, in the House and the Senate, but not to exceed 16 years of total service.
HJR 1026 by Rep. Jim Dotson seeks to cap legislative service at four two-year terms in the House and two four-year terms in the Senate. It also would limit future term limits changes to the General Assembly.
SJR 11 by Sen. Will Bond would limit service to 12 years, consecutive or not, in the General Assembly. Legislators who serve 12 years may run again after 10 years, which would trigger a new 12-year term limit.
Tort Reform
SJR 8, if referred and adopted, will authorize the General Assembly to adopt caps on punitive and noneconomic damages. That means, in the 2021 session, the legislature will have the ability to file bills and debate various options, ranging from caps on both punitive and noneconomic, only one of them, or none at all.
Two other identical measures were filed,
HJR 1022 and
SJR 17. These measures will authorize the General Assembly to adopt caps on punitive damages only. A measure allowing for a
cap on punitive damages only does not go far enough. In order for damage caps to truly work to the benefit of our economy and healthcare system, caps on noneconomic damages should also be part of the legislature's authority.
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PASS THROUGH ENTITY TAX
HB 1714
by Rep. Joe Jett and Sen. Dismang creates the elective pass-through entity tax act. Here are comments from tax attorney Matt Boch, from the Dover Dixon Horne Law Firm:
"Another Tax Reform and Relief Legislative Task Force recommendation has been introduced into the General Assembly: an elective passthrough entity tax. HB 1714 could potentially provide federal income tax relief to business owners who can no longer deduct state income taxes at the individual level, at least for tax years beginning on or after January 1, 2020.
The Arkansas Pass-Through Entity Tax would be a tax imposed on "the aggregate net taxable income of each of the members of an affected business entity," and that "affected business entity" would be liable for the tax. Partnerships, limited liability companies and S corporations could elect to be subject to the tax. The tax would be a flat tax using the top individual rate. The intent is that members of an electing pass-through entity would exclude their share of the pass-through entity income that was subject to the entity-level tax. (Some wording adjustments may be added by amendment to clarify this.) The election would be made by members comprising more than 50 percent of the voting rights in the pass-through entity.
Arkansas is following in the footsteps of Connecticut and Wisconsin, which have enacted pass-through entity taxes. In general, Arkansas HB 1714 hews closer to the Wisconsin model with the entity-level tax being elective and then providing an exclusion at the individual taxpayer level.
The sponsors of HB 1714 are Representative Jett and Senator Dismang, the respective Chairs of the House and Senate Revenue and Tax Committees. The bill may move quickly.
If
HB 1714
is enacted, Arkansas pass-through business will need to consult with their tax advisers about the appropriate course of action. The validity of elective pass-through entity taxes as a way to preserve the benefit of the federal SALT deduction has not been clearly established, and taxpayers would need to weigh their federal benefits and risks in addition to their state income tax analysis. At least with the delayed effective date until tax years beginning on or after January 1, 2020, there will be plenty of time to do so."
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NEW HOUSE INTRODUCTIONS
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Changes workers compensation laws to provide an absolute lien to an employer, carrier or self-insured entity in the recovery of benefits paid as a result of either settlement or judgment against a third party.
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Requires healthcare insurers to provide coverage for medication used to treat substance abuse without prior authorization and at the lowest-cost benefit tier.
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Increases the range of fines for the violation of passing a stopped law enforcement, emergency, utility or maintenance vehicle on the highway from $35-$500 to $250-$1,000.
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Repeals provisions that established gun-free zones, providing exceptions for college sports events, the State Hospital, UAMS facilities, courtrooms while in session, and corrections facilities.
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Requires health benefit plans to provide coverage and reimbursement for intraoperative neurophysiological monitoring provided through telemedicine during a surgery.
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NEW SENATE INTRODUCTIONS
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Authorizes municipalities to adopt a catastrophic leave program for employees with illnesses or injuries that are not covered by workers' compensation benefits.
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Requires a quorum court to call the required election to determine whether to levy fire department dues within 60 days of the request, and if passed to list the fire department dues beginning with the next property tax statement.
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Requires a person or other entity providing closing and settlement services for a real estate transaction to receive confirmation that the subject property has fire protection coverage in force before conducting the closing.
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Provides immunity for owners of real property, landlords, and tenants with regard to criminal acts committed on the property by third parties.
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Requires health insurers to contract with any healthcare provider that is licensed and in good standing with Medicare, Medicaid or any other federal health benefit plan.
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Prohibits a contracting entity from offering a healthcare provider a contract for healthcare services that includes certain requirements or clauses.
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A Constitutional Amendment to permit limits on awards of punitive and noneconomic damages in civil actions.
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Authorizes a health benefit plan enrollee to assign their benefits to a healthcare provider regardless of the provider's out-of-network status; requires the payor to submit payment of the claim directly to the healthcare provider.
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| CONTACT INFORMATION State Senators: 501-682-2902 State Representatives: 501-682-6211 To view schedules, calendars, bill information and legislator information, visit: www.arkleg.state.ar.us. To view live stream video and audio from the Arkansas House of Representatives, visit www.arkansashouse.org. Independent Insurance Agents of Arkansas phone: (501) 221-2444 IIAA web site: www.iiaar.org
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| The Weekly Legislative Update is written by Lynn Zeno; edited and distributed by Kari McAfee. |
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As a reminder, the Legislative Update is sent to all IIA of Arkansas members via electronic communications unless you notify us otherwise at
kmcafee@iiaar.org or by telephone at 501-221-2444
The Legislative Update is a publication of the Independent Insurance Agents of Arkansas to members and associate members of this Association. Reproduction, by any means, of material appearing in the Legislative Update is strictly forbidden without permission.
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